How Startups Compete for Talent in a Tight Job Market

Shortly after the COVID-19 pandemic began, social media management software was launched Buffer He made a radical change: he switched to a four-day workweek.

Search less. Close more.

Increase your revenue with all-in-one prospecting solutions powered by the leader in private enterprise data.

The decision came as a result of the pandemic and feedback from team turnout polls. The pandemic and its accompanying lockdowns have hit employees, especially parents, who now make up about 30 percent of the company.

So Buffer switched to a four-day workweek, partly to help the parents on the team, but really to mitigate burnout across the company. One of the company’s newest benefits, the shorter workweek, is now one of the perks that helps Buffer stand out in a competitive hiring market.

“It’s a big issue in hiring, and we’ve recently hired a couple of high-end people,” Hailley Griffis, director of public relations for Buffer, said in an interview. “And it’s a really competitive talent market right now, so the four-day workweek is a differentiator.”

Startups are hiring workers in a brutally competitive talent market. The US unemployment rate fell to 3.6 percent in March, a new low in two years, according to the most recent report from the Bureau of Labor Statistics. Cash-flushed startups after a record year in venture investing have set lofty hiring targets, but face tougher competition amid the “Great Resignation.”

That means the stereotypical perks of startups — ping pong tables, daily office lunches — are no longer enough for companies that want to attract the best workers.

Tech’s reputation for comfortable benefits and higher pay has helped the industry stand out from other sectors. But tech companies have yet to step up their game to compete for talent in the tight 2022 job market, and many are responding by offering higher wages, flexible hours, more paid time off and, increasingly, employer subsidies for things like fertility services, gym memberships. and child and elderly care.

“If you’re not offering work from anywhere, if you’re not offering unlimited PTO, if you’re not celebrating that PTO and making sure people are actually using it…you’re falling behind,” he said. jordan peaceCEO of the lifestyle benefits marketplace Stripe. “They went from being nice to being a must-have for betting at the table very quickly.”

Tech salaries rising fast

A “widespread hunger for talent” increased the average salary of US technologists by 6.9% between 2020 and 2021, to $104,566, according to the tech careers website. Dice2022 Tech Salary Report.

That number represents the the highest salary ever recorded by the report, and “a positive sign for technologists in terms of the current and potentially future value of their skills and experience.”

Managing Director of IT, CIO, CTO or similar positions had the highest average salary in 2021, at nearly $152,000. Systems architects and cloud architects/engineers came in second and third in terms of salary, earning an average of about $148,000 and $141,000, respectively.

Web developers experienced the highest average salary jump between 2020 and 2021, with those in the profession earning nearly $99,000 per year, a 21 percent increase from the average salary in 2020.

Wages are rising across the country, not just in tech hubs like San Francisco and New York. Pittsburgh and Atlanta saw some of the fastest-growing salary increases, with wage increases of about 14 percent year over year, according to Dice. Pittsburgh’s average tech salary was around $98,000 in 2021 and Atlanta’s was around $108,000, while Silicon Valley’s was around $133,000.

Benefits, not only pay

Tech employees don’t just want more money. They also want benefits that encourage work-life balance.

About 27 percent of tech workers cited child and elder care as an important benefit, but only 10 percent said they received the benefit, according to Dice. That demand is in part because more employees have reached the age where they care for both their parents and their own children.

Telecommuting has also become a priority for talent, and the labor market reflects that: The percentage of paid job offers in LinkedIn remote job posting increased 357 percent between 2020 and 2021, with media and technology having the highest concentration of remote job postings on the platform, by the company.

The “most important benefit” really does vary from employee to employee, and even changes for an employee over the course of their employment, according to Peace. A monthly fitness stipend, for example, might be an important benefit for an employee who enjoys working out, but may not be as helpful for an employee recovering from surgery.

The Fringe marketplace allows employers to allocate points to employees to use for whatever benefits they want. For example, an employee could use points awarded by their employer for a fitness membership or for a airbnb credit.

Senior employees on the Fringe platform consistently choose to spend their points on food: door board orders, meal kits blue apron, grocery delivery, coffee subscriptions and the like. That makes sense given that everyone needs food, but beyond that, the benefits employees choose vary.

For example, in March 2022, the top vendors chosen by platform employees were DoorDash and Uber Eatsfollowed by Airbnb and Uber. Neither Airbnb nor Uber were among the top 10 places employees chose to spend their points in April 2020, given the pandemic.

Peace said offering workers those options is important. “When you don’t restrict people, you don’t say you should be concerned about welfare, you should use this money for your student loan payment,” she said.

‘Supporting the whole person’

sales platform Seismic undertook a “pretty significant review” of its benefits for 2022, according to Linda Hothe company’s personnel director.

The San Diego-based company has employees in seven countries, so it’s trying to “catch up” when it comes to providing the benefits that other countries require.

The company’s decision to provide egg freezing and IVF benefits through its insurance provider turned out to be one of the most talked about changes.

Seismic evaluates its benefits about six to nine months before the end of the calendar year and looks at the demographics of its employees and what they might want, Ho said. Employees were especially interested in the decision to offer fertility benefits, a rare offering for a company Seismic’s size of about 1,500 workers.

Seismic looked at its competitors as it considered what benefits to offer to attract talent, Ho said. But he emphasized that employees want to be supported in more ways than one.

“A single perk will never attract or retain employees,” Ho said.

Seismic wants to “ignite growth,” both professionally and personally, he said. That means supporting employees in a holistic way, for example if they want to start a family now or potentially later.

“There is now an expectation, rightly so, that employers should manage and support the whole person,” Ho said. “Those employers who don’t step in will be the employers affected by the big waiver.”

Illustration: Dom Guzmán

Stay up to date with the latest funding rounds, acquisitions, and more with Crunchbase Daily.

Add Comment